Management buyouts and managerial ethics

Article Abstract:

Management buyouts, which have played an important role in the recent wave of corporate restructurings, have been criticized from several directions. This article addresses the problems created by management's conflict of interest. As members of the buyout team, managers have strong incentives to act in their own self-interest, yet they have a fiduciary duty to promote shareholders' interests. The conflict of interest inherent in management buyouts can be dealt with through a system of disclosure and review provided that management, board members, shareholders, and judges apply an appropriate standard of fair price. The authors propose a standard of fairness, the "synthetic MBO standard," based on the implications of management's fiduciary duties in the buyout context. They recommend that the disclosure requirements of the federal securities laws be modified to include disclosure of a company's value under this standard. (Reprinted by permission of the publisher.)

Research, Management buyouts

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Merger decision making: an ethical analysis and recommendation

Article Abstract:

Recommendations are presented that would allow for a fairer method for conducting merger procedures. Current procedures cause an imbalance of power between the decision makers and affected third parties in corporate mergers. A formal merger review period could be the basis for reforming the existing procedures.

Acquisitions and mergers

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Moral person and moral manager: how executives develop a reputation for ethical leadership

Article Abstract:

This article examines how executives can build a reputation as ethical leaders, focusing on how perceived ethical traits in managers can benefit employee morale and labor retention. Topics addressed include a moral manager's behaviors, decision-making processes, role-modeling, and communication.

United States, Business Ethics, Executives, Employee morale, Leadership

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